The Department of Labor’s fiduciary rule inspired many protests against the damage the regulation will inflict on businesses. But some also pointed out opportunities presented by the rule.
Although we have heard quite a bit about the potential damage, we haven’t heard much detail about the opportunities. So InsuranceNewsNet Publisher Paul Feldman and other INN staff members spoke with insurance marketers at the National Association of Life Brokerage Agencies annual meeting in November to find out more.
The meeting was after the election, so the respondents knew the rule is likely to be challenged by the Trump administration. But they said that many of the changes are still likely to remain.
Founder/Owner, Innovative Solutions Insurance Services, Los Angeles
Our organization does not do a lot of annuities; however, we do work with a lot of financial professionals. My goal is to continue emphasizing the importance of insurance planning for not just their top customers but for all of them. And perhaps they’ll have more of a focus in listening to that story.
I also think that the insurance companies in 2017 are moving quickly toward more of a drop-ticket, accelerated underwriting process. That will match very well with what advisors are used to with selling an annuity on a drop-ticket basis.
Right now, the process of buying or selling life insurance is a miserably long and difficult one. So as we utilize technology and move toward more automated, bloodless, urineless, APS-less underwriting, the investment advisor will embrace this far more. And hopefully they’ll have another reason to start looking more at life insurance than they have in the past.
Vice President, Senior Business & Product
Development Officer, One America Financial Partners
For us, the biggest impact is in our retail system. It’s creating a more concrete view of what we want to offer and how we’re going to do that. We’re creating a robust product and service environment for our agents to meet the needs of their clients, but it’s not necessarily a wide-open architecture approach.
Companies, distributors and advisors alike will be more selective and move to a more limited, but still comprehensive, product shelf offering that will meet the best interests of their clients.
When it comes to disclosure, some of those things are going to be uncomfortable for advisors when they first start. We have tried to focus on how to use that as an opportunity to explain and reveal the value you provide.
The Leaders Group,
Nobody is looking at life insurance right now. A hundred percent of the effort is being spent on annuities, mutual funds and managed money. Between now and Jan. 1, we’re going to have to come up with the expectations of what the policies and procedures look like to sell life insurance.
Financial advisors are going to have to do a financial plan for their customers, which they’ve not all done in the past. We know that 98 percent of the advisors in the wirehouses are licensed to sell insurance because they sell annuities.
If somebody is licensed to sell life insurance and doing a financial plan that does not include life insurance, we believe there’s a high possibility that the firm can be sued in a class-action lawsuit. They don’t have to sell life insurance, but they have to provide that information if they’re doing a financial plan.
The penetration of life insurance in the wirehouses has been at 2 percent at least since I started the business in 1979. It’s still there now.
I think this is going to give the industry the opportunity to get penetration that could be as much as 10 to 15 percent.
That would be a good deal for the industry. It’s also a good deal for consumers because, as we all know, we’re more uninsured than we’ve ever been.
President/CEO, Brokers International, Des Moines
If we become a financial institution, this is what’s going to change for the agent — more documentation first and foremost.
They have to justify the sale and justify the product. They’re used to doing some of that but not used to doing all of that and definitely not putting it on paper. So they have to do much more documentation than they’re doing today.
We will probably as a financial institution require them to have a contract with us that allows us the oversight and says that they’ll do this due diligence in return for our signing the best-interest contract. They’ll literally have to choose one FMO to do business with as a financial institution.
Many insurance-only agents right now have their appointments with several different FMOs. They might be with one FMO for one carrier and one FMO for another carrier. You have to choose one,
because you won’t be able to be with two financial institutions.
An insurance-only agent isn’t used to an audit, meaning having someone come out to their office and look through their files. That’s going to be different because most likely we’re going to require an audit. Any financial institution is going to require one either every year or every two years or every three years, much like a broker/dealer.